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Fidelity Hit with $1.65 Million Fine Over Options Trading Standards

Posted on October 25th, 2023 at 11:34 AM
Fidelity Hit with $1.65 Million Fine Over Options Trading Standards

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï 

Massachusetts Secretary of the Commonwealth, William F. Galvin, has imposed a $750,000 fine on Fidelity Brokerage Services for their alleged past practice of hasty approval of clients' applications to trade options.

Galvin's office stated that Fidelity displayed a negligent and lackadaisical approach when assessing clients' capability to engage in trading risky securities.

The Financial Industry Regulatory Authority Inc. (FINRA) also penalized Fidelity with a $900,000 fine. FINRA claims that from May 2017 to April 2022, Fidelity failed to exercise proper due diligence before granting customers the ability to trade options. Fidelity's screening process involved a flawed electronic system to evaluate online applications for options trading, followed by a review by a principal at the firm to determine customer approval for options trading.

According to InvestmentNews, Fidelity has fully cooperated with the Massachusetts Securities Division. Fidelity consented to FINRA's findings without admitting or denying them.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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